'Confidence vs. fear' key in biofuels debate

The biofuels boom will pose an important challenge for livestock producers by driving up the cost of feed grains. But the long-term implications of this ethanol emphasis are far from certain and how livestock producers fare will ultimately depend heavily on the mindset they have in facing it.

That was the perspective provided by Larry Martin, CEO of the George Morris Centre, and Brian Knudson, Brand Manager with Cargill, in a keynote session on feed competitiveness at the 2007 Banff Pork Seminar.

"A lot of the talk the past few months is about how biofuels growth is going to hammer livestock production," says Martin. "But the reality is there's a lot we don't know. We know biofuels will increase feed costs dramatically in the short term, but we don't know if this is a long-term shift or not."

Many important questions are unanswered, including whether ethanol production from corn and other feedgrains will be sustainable, says Martin. "For example, the net energy balance for corn is small – 10 percent for corn vs. 370 percent for sugarcane. Gas mileage is lower with ethanol, the US would have to import natural gas to make it, and extra nitrogen is required to grow corn."

Unknown breakthroughs could also shake-up the dynamics, he says. "There's the prospect of cellulose, which may ultimately be the best bio-energy source. There could also be major technology innovations. Biodiesel from lower value sources such as palm oil is another factor."

Byproducts from ethanol production has been touted as an alternative feed source for livestock, but that potential is limited, says Martin. "Ethanol byproducts can only replace about 40 percent of cattle rations, 20 of hog rations and even less of poultry – and those estimates may be optimistic. What happens if the supply of byproducts exceeds the demand? How is that excess handled?"

Many factors point to a sustained increase in biofuel production, including US government policies aimed at reducing reliance on foreign oil and reducing greenhouse gas emissions, he says. "There's little doubt more energy will come from farms and ranches in the long-term, says Martin. "But even in theory right now we don't know which energy source is going to win out."

The emergence of biofuels is a dramatic paradigm shift for agriculture, says Cargill's Brian Knudson. "There is always change. The key remains in how each of us will respond to the new paradigms, the new processes and ultimately the new value that emerges."

Biofuels will have a huge impact on pork category, he says. Mindset will be critical for producers to recognize and prosper in the new environment.

"Choosing confidence over fear and constantly looking at things with fresh eyes - those are the types of approaches that are key to adapting and thriving," says Knudson. Examples are Cargill's focus on "nutrients instead of ingredients" and "value instead of cost."

"Looking at value from a nutrient base has tremendous opportunity. Yesterday we looked at a very simple nutrient vocabulary, but today's world has changed that, just like the Googles and iPods and BlackBerrys of the world have changed it."

Focusing on nutrients has helped Cargill teams make better and faster decisions by having a clearer understanding of value, says Knudson. "Tomorrow there will be a new value base and the opportunities once again will lie in recognizing that."

The Banff Pork Seminar, held annually since 1972, is one of the premier pork seminars in North America. The Seminar is coordinated by the Department of Agricultural, Food and Nutritional Sciences, University of Alberta, in cooperation with Alberta Pork, Alberta Agriculture and Food and other pork industry representatives from across Canada. Program and proceedings of the 2007 Banff Pork Seminar are available on the Seminar Web site, www.banffpork.ca.

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